The Great Lettings Fee Ban of 2019

It’s coming. In true Game of Thrones dramatic fashion, it’s not winter, but The Tenant Fee Act (2019). The act that will see almost all additional fees eradicated from tenants charges will come into force on 1 June 2019, and it’s having a big impact on how landlords and agents find and manage their tenants.

After another cracking week at Home-Share Lettings HQ, it’s making me think again about the impact of the ban on our market. To start I thought it might be useful to share some quick fire facts about the ban.

What is the tenants fee ban?

It’s government legislation that determines exactly what fees and charges landlords and agents can pass on to their tenants.

Who enforces the tenant fees ban?

Trading Standards authorities have a duty to enforce the ban but district councils also have the power to enforce, if they choose to do so.

What kind of penalties will there be?

A civil offence can carry a financial penalty of up to £5,000. But a second breach within 5 years will be a criminal offence. The penalty for which is a banning order with an unlimited fine.

Exactly what fees are banned?

Nearly all common tenant fees are now banned. The only payments you can charge in connection with a tenancy are:

  • the rent
  • a refundable tenancy deposit (see more below)
  • a refundable holding deposit (to reserve a property)
  • payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
  • payments associated with early termination of the tenancy, when requested by the tenant
  • payments in respect of utilities, communication services, TV licence and council tax; and
  • a default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement

Anything not on this list is a prohibited payment and you simply cannot charge for it. Specific examples are credit checks, inventories and referencing.

Deposits? What about deposits?

Holding deposit restrictions have been changed and their value is limited to 1 weeks’ rent. Not only that but (prepare for a sharp intake of breath) tenancy deposits will be limited to 5 weeks’ rent where the annual rent is less than £50,000. Or six weeks’ rent where the total annual rent is £50,000 or above.

Also, in a clever bid to restrict landlords from offsetting losses through artificial rent inflation, landlords will no longer be able to offer sliding scale rents.

The full document with guidance for landlords and agents on the Tenants Fee Act can be found here.  

What does the tenants fee ban mean for landlords and agents?

There is obviously mixed opinion as to whether the act is “fair” with landlords highlighting the time, effort and expense it can take to change tenants. But tenants are – of course – overjoyed with the change and not without reason. Unscrupulous agents charging exorbitant fees have ruined the market for those who charge fairly for their services.

But that said, it will be those amateur agents and potentially self-managing landlords who are most likely to be worst hit, with many falling foul of the new rules and simply crumpling under the weight of the legislation.

To me, it seems the announcement that Client Money Protection (CMP) insurance becoming mandatory on 1st April, is incredibly timely, almost preempting some of those shady agents going bust when the fee ban kicks in and making off with landlord/tenant money!

Sensible agents and landlords will have planned ahead. And happily, I can say that is exactly what my lettings company Home-Share have done. We believe the service we deliver is the best and that our pricing is a fair reflection of that service. I’ve said it many times but we care about our tenants and our landlords, and always aim to treat their properties like they are our own. We aren’t the cheapest but we are proud of that because our value for money is represented in our price. Besides, we specialise in a niche market (HMO) and so we don’t compare prices because no one else does what we do.

This week alone my team and I have booked a dozen viewings, taken another fifteen enquiries, let four rooms and proffered investment advice. I think that speaks for itself. And I hope our customers do too!


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